Tuesday, November 20, 2012

Physical cash is old and well-working concept. It has a good privacy model, it is relatively anonymous and it is easy and fast to use. Physical cash won't go away anytime soon, because it works so well.

However there are some problems, which might become bigger issues in the future. Central banks are always able to print physical money as much as they want, which will cause devaluation of physical cash for everyone. Additionally, even if you believe in central banks, private entities with skills and resources are able to print cash as well. In fact, there already exists counterfeit cash which even skilled experts can't distinguish from goverment-printed money.

Bitcoin solves effectively the counterfeiting problem, or so called double-spending problem. It also removes nicely the need to trust the central bankers. However, being a virtual currency, using bitcoins is often seen much more difficult than using cash or other traditional payment methods.

One nice concept around Bitcoin is a paper wallet. It allows anyone to store bitcoins on a paper, like physical cash. Unlike physical cash, bitcoin paper wallets aren't suitable for large-scale trade, but they have other useful applications:

Getting people introduced to bitcoins, a learning tool

Relatively secure way to store bitcoins - generate the paper wallets offline on a computer, print them out, and store them in a bank safe

Trade in high-trust environment, such as between friends and family

The simplest possible bitcoin bank note contains only the private key. You can derive the corresponding Bitcoin address from the private key. However usually it makes sense to include also the corresponding bitcoin address, to make usability easier.

Other than that, only the sky is the limit. Bitcoin paper wallets come in all sizes and forms, and it is also fairly easy to create your own design. You can store any amount of bitcoins on paper wallet - be it one million bitcoins or 0.00000001 bitcoins (one satoshi). You can also load them as you go - it might be useful to have receiving addresses in your wallet, just in case. You can store the private key somewhere else securely.

The best thing about bitcoin paper wallets is that they are not dependant on any of the running bitcoin services, except the bitcoin network itself. Even if invidual web sites come and go, the Bitcoin network highly probably will stay up and running, and you will be able to redeem your bitcoins even aften waiting 10 years.

Printing your own Bitcoin bank notes

Bitaddress.org provides easy way to print your own bitcoin cash. The steps are:

Start your web browser. Use incognito window or similar.

Go to bitaddress.org

Disconnect your computer from the internet

"Paper Wallet" -> "Print"

Clear browser cache and all private data, restart browser

Tinfoil hats will not be happy with these instructions, therefore I have included extra security cautions in the footnote [1].

After printing, you can apply some kind of tamper-evident sticker on top of the private key. Also one option is to laminate the wallets, as I did - it makes them more durable.

Creating your own custom design
Bitaddress.org is just a static html/javascript page, you can download it to your computer and modify the behaviour to match your requirements. The most obvious thing is to create your own design for the bank note.

This can be done with following steps:

Create your custom artwork with any program such as inkscape or photoshop

You can also replace the site logo (id logo), or localize the site to your own language. Then you can upload the html file to your own server, so anyone can use your design to generate bitcoin paper wallets.

Loading and redeeming paper wallets

Naturally any QR-scanning capable bitcoin wallet app can be used to load the paper wallet. Not all apps can be used to redeem the contents. Our easywallet.org web wallet can be used to sweep the transactions from the private key. It works on iPhone and Android, also with one-tap if configured properly. Easywallet.org doesn't import the private keys, it just sweeps the unspent transactions to the wallet address and after that forgets the private key.

Thursday, November 15, 2012

The International Restaurant Day is coming again on next saturday, and hundreds of small restaurants will be popping around the world. The event started from Helsinki, Finland, and has been spreading since then to new countries and cities.

For small-time restaurants, payments are always a problem. Cash is cumbersome, and it is hard to keep enough change for your customers. Accepting credit or debit cards is really expensive, and if you want to set up a temporary restaurant you usually don't want to invest in a credit card terminal.

Bitcoin is nice, because in addition to solving the central banking problem, it also fixes the change money problem, and also it is very easy to accept bitcoin payments. Below I will visit different ways to accept bitcoin payments from your customers.

Easywallet.org - probably quickest and easiest
All platforms: iPhone, Android, laptops, any device with a web browser
To set up accepting payments, just go to easywallet.org and the service will generate a random web address for you, which is the key to your bitcoins. Bookmark it, and you can start accepting bitcoins. The service supports currency conversions with 24h exchange rate, so you don't need to worry about the exchange rate, and the rate will be fair to both buyer and seller.

From your settings, turn off "Use Static Address". This way the service will generate new address each time you receive payments, allowing you to separate your customers more effectively.

To move your bitcoins elsewhere, you can use QR code scanner on iPhone and Android. You can also send the URL to your email, and handle cashing out from your computer.

Giving change as bitcoins
You have run out of pocket change and can't give your customer money? Maybe he/she will accept bitcoins. Print some paper wallets from bitaddress.org. When customer requests change, zap change amount worth of bitcoins to a paper, and give the paper to the customer. The customer can cash out his/her bitcoins from his computer at home.

Cashing out bitcoins to euros/dollars/fiat
There are lots of exchanges which allow you to convert your bitcoins to more traditional currencies. My favourite bank transfer-based exchange is bitstamp.net.

However, if you want to spur up the local bitcoin economy, look for a cash dealer at localbitcoins.com - you can also set up your own "selling bitcoins" advertisement, and help local people to get to know bitcoins a little better.

Hope everyone has a great Restaurant Day! If you consider accepting bitcoins and have any questions, send me an email to jeremias.kangas@gmail.com . Feel free to ask anything. Also if you will accept bitcoins on next saturday, give me a note - I can advertise your pop-up restaurant for free :)